Crude oil maintains bullish trend
Fawad Razaqzada January 23, 2017 6:28 PM
Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal. The cartel reported that it was near its target of cutting 1.8 million barrels of crude oil per day, and shrugged off threats that the US may be cutting oil imports after Donald Trump promised to make the US energy self-sufficient. Instead, Saudi’s oil minister, Khalid Al-Falih, said the US is “closely integrated in the global energy market.”
In all honesty, it is unreasonable to expect Mr Al-Falih to say anything different. Of course he is going to say that the OPEC’s production cuts are going well, even if that is not necessarily the case. He knows full well that another surge in US shale supply is coming, as indicated for example by the rising rig counts. Any chance for Mr Al Falih to jawbone oil prices higher, he will.
That being said, it could be several months before we see US oil production respond (positively) in a meaningful way to higher oil prices. Shale producers may allow the oil market to fully rebalance before increasing production once again. So, it is far too early in my view for the impact of renewed rise in US oil production to be reflected in falling oil prices.
In fact, both oil contract remain – for the time being – above their respective key support levels. Brent has repeatedly defended the broken old resistance at $54, while WTI has held its own above the $50.80/$51.00 area again. Thus, we haven’t yet seen any break in market structure of higher highs and higher lows. The trend therefore remains bullish for oil until the charts say otherwise. Some key technical levels are shown in the charts – red means resistance, blue support.
Source: eSignal and FOREX.com.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.